How price floors create market surpluses and unintended consequences
Explore the mechanics of price floors and their impact on market equilibrium. This walkthrough examines how setting a minimum price disrupts the balance between supply and demand, leading to measurable economic shifts.
This lesson from Marginal Revolution University details the economic implications of implementing a price floor. It focuses on how such a mechanism alters the relationship between quantity supplied and quantity demanded, specifically illustrating how a floor can trigger a market surplus.
The session provides a technical guide to graphing these interventions on supply and demand models. Beyond mere identification, the walkthrough analyzes the broader welfare effects and the unintended consequences that arise when prices are prevented from reaching equilibrium.
Source: Day 2: Price Floors | Price Ceilings & Price Floors Unit Plan Walkthrough
